Alumni Column: Critical Thinking and Framing the Political Debate



In Hans Christian Andersen’s famous tale The Emperor’s New Clothes, swindling weavers promise the Emporer the finest suit of clothes from a fabric invisible to anyone unfit for their positions or incompetent. While the emperor and his ministers pretend to see the cloth of his clothes out of fear of appearing unfit for their own positions, it takes the naïve wisdom of a child to cry out that the emperor actually has no clothes, only after which do the rest of the emporer’s subjects make the same cry. One of the many great successes of the liberal arts curriculum at Colgate is to empower students and graduates to think critically and independently and, at times, to go against herd mentality.

There are always shrewd individuals who think independently but, by definition, most everyone follows the crowd and only in hindsight recognizes that they had at least an inkling that something was amiss but lacked the conviction to stand up to the herd mentality of the crowd. In the 1600s, the Dutch craze for tulips created a bubble where contracts for tulip bulbs sold for more than ten times the annual income of a skilled craftsman until, of course, the bubble burst. In hindsight, no Dutch citizen would surely have argued that it never occurred to them that tulip prices would not go up forever. More recently, the peak of the internet bubble just over a decade ago marked the end of a crazed few years of a “new paradigm” in which people quit their jobs to chase the dream of becoming instant millionaires on paper just by starting a company in their garage with an “e-” prefix and/or a “.com” to their name, often without so much as a simple business plan in place. But, in hindsight, few would argue that it actually made sense that companies with no revenues or even a plan to achieve revenues could ever achieve profitability. More recently, a confluence of lax credit standards and a series of regulatory missteps allowed for a housing market bubble so severe that its collapse led to near destruction of the global economy and repercussions that will be felt for years. Yet, in hindsight it would probably be tough to find someone still making the argument (as many a real estate broker and many a financier did just a few years ago) that home prices will always go up in perpetuity no matter what happened. Conversely, everyone recognizes in hindsight that it neither made sense that banks were willing to make loans to millions of people with little or no verification of their income or assets nor did it make sense that people should have borrowed for either the purpose of speculatively buying a home to try to profit from the craze (or alternatively borrowing excessively just to buy something much larger or nicer than they could otherwise afford). The point is that while it is easy to be correct in hindsight, it is far more challenging to think critically and employ simple observations in order to develop the conviction to argue against self-proclaimed experts in the middle of a herd mentality environment.

Last week, President Barack Obama signed into law his prized healthcare reform bill, which was preceded by more than a year of extensive debate. It is a universally agreed upon reality that healthcare expenditures are significant and growing for individuals, employers and the government and nobody questions the honorable goal of striving towards the highest standards of healthcare delivered in the most economically efficient manner possible to all Americans. Irrespective of your political leanings, there were several aspects of the healthcare reform debate that were refreshing, namely most politicians ultimately took a strong stand and, for better or worse, many staked their political futures on this issue. Needless to say, the debate on healthcare has been highly politically charged and contentious and could hardly be characterized as a herd mentality. Nevertheless, I think there are important conclusions to be drawn from the herd mentality examples discussed above: too few citizens question the assumptions underlying the assertions made by various politicians, lobbyists and political commentators on both sides of the aisle as well as theoretically objective government offices. For example, the budgetary “facts” relied upon during the debate and ultimately for the bill that was signed preposterously assert that the bill will reduce the deficit by more than one hundred billion dollars over the next ten years, and by more than one trillion dollars over the following decade. Irrespective of your political leanings, common sense alone would lead any reasonable critically thinking person to question how extending healthcare insurance coverage to more than 32 million Americans can simultaneously reduce the deficit. Like most entitlement programs, the real answer lies in accounting gimmickry in that the budget for the health care reform program relies on, amongst other things, the assumption of hundreds of billions cuts in Medicare (which are very unlikely to actually occur) and increased revenues from Social Security (which itself is an unfunded entitlement program headed towards insolvency and desperately needs to retain any increased revenues, should they occur, to stay afloat).

The important part of the debate over healthcare isn’t a social debate over the goal as everyone agrees on the goal, but admittedly not the implementation, of better healthcare for all Americans. The debate over healthcare is an economic and structural debate that is not ending, but rather just beginning, with the signing of the healthcare reform bill. Supporting the healthcare reform bill is a very respectable political position, but only if in taking that position you own up to the facts and rely on reasonable assumptions about the true cost of its implementation as opposed to the accounting and political gimmickry that politicians have relied upon. From a broader perspective than the debate on healthcare reform, excessive sovereign borrowing and the printing of money will, by definition, eventually lead to inflation as governments sell record amounts of debt to finance surging deficits.

The resultant devaluation of the currency will lead to a reduction in purchasing power of the dollar as well as very similar declines in the purchasing power of other major currencies where similar trends are occurring. These trends are important and will surely play a large role in shaping the geo-political and economic future of the world. Irrespective of any of our political leanings, I implore all of us to challenge each other and our leaders to justify their assertions with true and transparent facts so that so as to fairly frame future political debates.